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DEPARTMENT SEMINAR 2014-2015

 
Juin 2015

Changements date et horaires :
Lundi 8 juin

12:15 - 13:45
 
Bibliothèque rez-de-chaussée - Département d'Economie

Oleg ITSKHOKI (Princeton)

Titre : "Optimal Development Policies with Financial Frictions"

avec Benjamin Moll
 

Résumé : We study optimal dynamic Ramsey policies in a standard growth model with financial frictions. For developing countries with low financial wealth, the optimal policy intervention increases labor supply and lowers wages, resulting in higher entrepreneurial profits and faster wealth accumulation. This in turn relaxes borrowing constraints in the future, leading to higher labor productivity and wages. The use of additional policy instruments, such as subsidized credit, may be optimal as well. In the long run, the optimal policy reverses sign. Taking advantage of the tractability of our framework, we extend the model to study its implications for optimal exchange rate and sectoral industrial policies.

 

*****

Mardi 2 juin
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Adrien VERDELHAN (MIT)

Titre : "The Volatility of International Capital Flows"

 
 
 
Mai 2015
 
Mardi 26 mai
11:00 - 12:30 
Attention changement de lieu : Amphi Gregory

Dan LEVIN (Ohio State University)

Titre : "Bridging Nash Equilibrium and Level-K Model"

Résumé
 

*****

 

Mardi 19 mai
11:00 - 12:30 
Attention changement de lieu : Amphi Cauchy

Srihari GOVINDAN (Rochester)
 

Titre : "Towards an Axiomatic Theory of Stability"

Résumé : In Govindan and Wilson (2012) we showed that any refinement of Nash equilibria that satisfied two axioms–Backward Induction and Small Worlds-–must select from the stable outcomes in generic, two-person, extensive-form games. In this paper, we propose a stronger version of the Small Worlds axiom and prove a similar result for generic, N-person, extensive-form games. The talk will focus on the axioms used, and in particular on their implications for what games are to be considered strategically equivalent.
 

*****
 
Mardi 12 mai
11:00 - 12:30 
Attention changement de lieu : Amphi Cauchy

Catherine BOBTCHEFF (TSE)

Titre : "Researcher's Dilemma"
 

Résumé : We model academic competition as a game in which researchers fight for priority. Researchers privately experience breakthroughs and decide how long to let their ideas mature before making them public, thereby establishing priority. In a two-researcher, symmetric environment, the resulting preemption game has a unique equilibrium. We study how the shape of the breakthrough distribution affects equilibrium maturation delays. Making researchers better at discovering new ideas or at developing them has contrasted effects on the quality of research outputs. Finally, when researchers have different innovative abilities, speed of discovery and maturation of ideas are positively correlated in equilibrium.
*****
 

Mardi 5 mai
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Henry FARBER (Princeton)

Titre : "Why You Can’t Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers"
 

Résumé : In a seminal paper, Camerer, Babcock, Loewenstein, and Thaler (1997) find that the wage elasticity of daily hours of work New York City (NYC) taxi drivers is negative and conclude that their labor supply behavior is consistent with target earning (having reference dependent preferences). I replicate and extend the CBLT analysis using data from all trips taken in all taxi cabs in NYC for the five years from 2009-2013. Using the model of expectations-based reference points of Koszegi and Rabin (2006), I distinguish between anticipated and unanticipated daily wage variation and present evidence that only a small fraction of wage variation (about 1/8) is unanticipated so that reference dependence (which is relevant only in response to unanticipated variation) can, at best, play a limited role in determining labor supply. The overall pattern in my data is clear: drivers tend to respond positively to unanticipated as well as anticipated increases in earnings opportunities. Additionally, using a discrete choice stopping model, the probability of a shift ending is strongly positively related to hours worked but at best weakly related to income earned. These results are consistent with the neoclassical optimizing model of labor supply and suggest that consideration of gain-loss utility and reference dependence is not an important factor in these labor supply decisions. I explore heterogeneity across drivers in their labor supply elasticities and consider whether new drivers differ from more experienced drivers in their behavior. I find substantial heterogeneity across drivers in their elasticities, but the estimated elasticities are generally positive and only rarely substantially negative. I also find that new drivers with smaller elasticities are more likely to exit the industry while drivers who remain learn quickly to be better optimizers (have positive labor supply elasticities that grow with experience).
 
 
 
Avril 2015

Mardi 14 avril
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Ingela ALGER (Toulouse School of Economics (LERNA, CNRS) and Institute for Advanced Study in Toulouse)

Titre : "Evolutionarily stable strategies, preferences and moral values, in n-player interactions"

Avec Jorgen Weibull
 

We provide a generalized definition of evolutionary stability of heritable types in arbitrarily large symmetric interactions under random matching that may be assortative. We establish stability results when these types are strategies in games, and when they are preferences or moral values in games in which each player’s preferences or moral values are the player’s private information. We show that certain moral preferences, with degree of morality equal to the index of assortativity, are evolutionarily stable. In particular, selfishness is evolutionarily unstable when there is positive assortativity in the matching process. We also establish that evolutionarily stable strategies are the same as those played in equilibrium by rational individuals with evolutionarily stable moral preferences. We provide simple operational criteria for evolutionary stability and apply these to canonical examples.

Contact : Yukio Koriyama

 
 
Mars 2015
 
Mardi 31 mars
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Christophe WOORDRUFF (Warwick)

Titre : "Managerial Capital and Productivity: Evidence from a Training Program in the Bangladeshi Garment Sector"
 

*****

 

Mardi 24 mars
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Bard HARSTAD (University of Oslo)

Titre : "Conservation Contracts and Political Regimes"

(with Torben Mideksa)
 

Abstract : Motivated by tropical deforestation, we analyze (i) a novel theory of resource extraction,
(ii) the optimal conservation contract, (iii) the political regime preferred by the principal, and how this contrasts with the equilibrium regime.
(i) This paper first presents a simple model where each country or district decides whether to exploit or protect its resource. There are multiple districts and a common market for the harvest. If districts are strong, in that they find protection inexpensive, exploitation is sales-driven and a district benefits if neighbors conserve more by selling less. Conversely, if districts are weak or exploitation illegal, a district loses when neighbors conserve since this raises the pressure and thus the protection costs. Consequently, centralizing political authority increases conservation if and only if districts are strong.
(ii) We next study the problem of a donor designing conservation contracts (satisfying participation constraints and incentive constraints) and show how the equilibrium contract depends on the political regime. The equilibrium contract provides stronger incentives to conserve if districts are weak than if they are strong - the opposite of the first best. Thus, there is too much conservation if districts are weak, and too little when they are strong.
(iii) Finally, we endogenize the political regime. Although contracting with the central authority is socially optimal, the donor benefits from contracting with districts if they are weak, since the negative externality from one district to another can be exploited by the donor. However, the presence of the donor can motivate the districts to centralize power when they are weak, or to decentralize if they are strong. This regime change harms the donor and the accompanying raise in deforestation may outweigh the effect of the contract itself.
Contact : Eric Strobl
*****

 

Mardi 17 mars
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Hervé MOULIN (University of Glasgow)

Titre : "One dimensional mechanism design"
 

Abstract: When agents' allocations are one-dimensional and preferences are convex, the three perenial goals of mechanism design, efficiency, prior-free incentive compatibility and fairness (horizontal equity) are compatible. This has been known for decades in the cases of voting and of division of a non disposable commodity. We show that it is in fact true when the range of allocation profiles is an arbitrary convex and compact set. Examples include: load balancing with arbitrary flow graph constraints; coordinating joint work inside a team or across teams, when individual contributions are substitutable or complementary; and any joint venture with a convex technology where each agent provides a single input or consumes a single output. The set of efficient, incentive compatible and fair mechanisms is very rich, and additional requirement such as consistency are needed to identify reasonable candidates.

contact : Yukio Koriyama
 

*****
 
 
Mardi 10 mars
11:00-12:30
Bibliothèque rez-de-chaussée - Département d'Economie

Alan MANNING (LSE)

"Reservation Wages and the Wage Flexibility Puzzle"

(with Felix Koenig and Barbara Petrongolo) 
 

Abstract: Wages are only mildly cyclical, implying that shocks to labour demand have a larger short-run impact on unemployment rather than wages, at odds with the quantitative predictions of the canonical search and matching model. This paper provides an alternative perspective on the wage flexibility puzzle, explaining why the canonical model can only match the observed cyclicality of wages if the replacement ratio is implausibly high. We show that this failure remains even if wages are only occasionally renegotiated, unless the persistence in unemployment is implausibly low. We then provide some evidence that part of the problem comes from the implicit model for the determination of reservation wages. Estimates for the UK and West Germany provide evidence that reservation wages are much less cyclical than predicted even conditional on the observed level of wage cyclicality. We present evidence that elements of perceived “fairness” or “reference points” in reservation wages may address this model failure.
 
 
 
Janvier 2015
 
Mardi 20 janvier
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Thomas STERNER  (Gothenburg)
Titre: "tba"

Contact : Eric Strobl

*****

Lundi 12 Janvier 

11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Gaël GIRAUD (Paris I)
Titre: "Debt-Deflation versus the Liquidity Trap"
 

Résumé: This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, endogenously incomplete markets of financial securities, durable goods and production. Short positions in financial assets and long-term loans are backed by collateral, the value of which depends on monetary policy. We show that the Quantity Theory of Money turns out to be compatible with the long-run non-neutrality of money. Moreover, only three scenarios are compatible with the equilibrium conditions: 1) either the economy enters a liquidity trap in the first period; 2) or a credible expansionary monetary policy accompanies the orderly functioning of markets at the cost of running an inflationary risk; 3) else the money injected by the Central Bank increases the leverage of indebted investors, fueling a financial bubble whose bursting leads to debt-deflation in the next period with a non-zero probability. This dilemma of monetary policy highlights the default channel affecting trades and production, and provides a rigorous foundation to Fisher’s debt deflation theory as being distinct from Keynes’ liquidity trap.
 
 
 
Decembre 2014
 
Mardi 16 décembre
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Xavier VIVES (IESE Barcelona)

Titre "Endogenous Public Information and Welfare in Market Games"
 

Résumé : This paper performs a welfare analysis of markets with private information in which agents can condition on (potentially noisy) prices in the rational expectations tradition. Price-contingent strategies introduce two externalities in the use of private information: a pecuniary externality and a learning externality. In the normal case with decreasing marginal utility, the pecuniary externality induces agents to put too little weight on private information and overwhelms the opposite tendency induced by the learning externality. This leads to prices which are “too informative”. The welfare loss at the market solution may be increasing in the precision of private information. The analysis provides insights into optimal business cycle policy and a rationale for a Tobin-like tax for speculators in financial markets."
 
***** 

 

Mardi 8 décembre
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Maria GUADELOUPE (INSEAD)

Titre "The Birth of a Multinational"
 

This paper shows how firms become multinationals, and how this relates to productivity and innovation. A lot has been written about the superior performance of multinationals and also about the effect that multinationals have on the firms they acquire. But most of that work is based on "mature" multinationals that have been in existence for a while and are fairly large already. Instead, we focus on "the birth of a multinational" i.e. on firms that start off being purely domestic and that make their first investment abroad so that they own facilities in at least two countries. We study what kind of firms these "baby multinationals" are, where they invest and in particular we focus on how their choice to invest abroad is related to productivity and innovation. First, we show that there is a strong selection effect whereby it is the most productive firms, which are already exporters who decide to invest abroad and we show that the main motive for the investment is market access rather than sourcing new materials. Second, we have data on product and process innovation at these firms and describe how firms sequence their choices to innovate and invest abroad. We find that while process innovation tends to precede investing abroad, product innovation tends to occur after they first invest abroad. Our very detailed data allows us to provide a quite rich picture of how these decisions are made and sequenced.

Contact : Raïcho Bojilov
 

*****
 
Mardi 2 décembre
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Tito BOERI (Bocconi)

Titre : "Severance Pay"
 

Résumé : All OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in case of employer initiated job separations. According to the extensive literature on Employment Protection Legislation (EPL), such transfers are either ineffective or less efficient than unemployment benefits in providing insurance against labor market risk. In this paper we show that mandatory severance is optimal in presence of wage deferrals motivated by deterrence of opportunistic behavior of workers. Our results hold under risk neutrality and in general equilibrium. We also establish a link between optimal severance and efficiency of the legal system and we characterize the effects of shifting the burden of proof from the employer to the worker. Our model accounts for two neglected features of EPL. The first is the discretion of judges in interpreting the law, which relates not only to the decision as to whether the dismissal is deemed fair or unfair, but also to the nature, economic vs. disciplinary, of the layoff. The second feature is that compensation for dismissal is generally increasing with tenure. The model also rationalizes why severance is generally higher in countries with less efficient judicial systems and why small firms are typically exempted from the strictest EPL provisions.
Contact : Raïcho Bojilov
 
 
Novembre 2014
 
Mardi 25 novembre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Daniel GARRET (Toulouse School of Economics)

Titre : "Competitive Screening under Heterogeneous Information"

avec Renato Gomes and Lucas Maestri (Toulouse School of Economics)
 

Résumé : We study competition in price-quality menus when consumers privately know their valuation for quality (type), and are heterogeneously informed about the offers available in the market. While firms are ex-ante identical, the menus offered in equilibrium are ordered so that more generous menus leave more surplus uniformly over types. More generous menus provide quality more efficiently, serve a larger range of consumers, and generate a greater fraction of profits from sales of low-quality goods. By varying the mass of competing firms, or the level of informational frictions, we span the entire spectrum of competitive intensity, from perfect competition to monopoly.
contact : Raïcho Bojilov
 
*****

 

Mardi 18 novembre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Yann BRAMOULLE (Aix-Marseille School of Economics)

Titre : "Altruism in Networks"

avec Renaud Bourlès
 

Résumé : We provide the first theoretical analysis of altruism in networks. Agents are embedded in a fixed, weighted network and care about their direct friends. Given some initial distribution of incomes, they may decide to support their poorer friends. We study the resulting non-cooperative transfer game. Our analysis highlights the importance of indirect gifts, where an agent gives to a friend because his friend himself has a friend in need. We uncover four main features of this interdependence. First, we show that there is a unique profile of incomes after transfers, for any network and any utility functions. Uniqueness in transfers holds on trees, but not on arbitrary networks. Second, there is no waste in transfers in equilibrium. In particular, transfers flow through indirect paths of highest altruistic strength. Third, a negative shock on one agent cannot benefit others and tends to affect socially closer agents first. In addition, an income redistribution that decreases inequality ex-ante can increase inequality ex-post. Fourth, altruistic networks decrease income inequality. In contrast, more altruistic or more homophilous networks can increase inequality.
contact : Raïcho Bojilov
 
*****
 
Exceptionnellement :  Lundi 10 novembre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Gianluca VIOLANTE (NYU, CEPR, and NBER)

co-auteurs : Jonathan Heathcote (Federal Reserve Bank of Minneapolis and CEPR)  Kjetil Storesletten (University of Oslo and CEPR).

Titre : "Optimal Tax Progressivity: An Analytical Framework"
 

Résumé : What shapes the optimal degree of progressivity of the tax and transfer system? On the one hand, a progressive tax system can counteract inequality in initial conditions and substitute for imperfect private insurance against idiosyncratic earnings risk. At the same time, progressivity reduces incentives to work and to invest in skills, and aggravates the externality associated with valued public expenditures. We develop a tractable equilibrium model that features all of these trade-offs. The analytical expressions we derive for social welfare deliver a transparent understanding of how preferences, technology, and market structure parameters influence the optimal degree of progressivity. A calibration for the U.S. economy indicates that endogenous skill investment, flexible labor supply, and the externality linked to valued government purchases play quantitatively similar roles in limiting desired progressivity.
contact : Jean-Baptiste Michau
 
*****
 

Mardi 4 novembre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Jesper BAGGER (Royal Holloway)

Titre : "An Empirical Model of Wage Dispersion with Sorting"
 

Résumé : This paper studies wage dispersion in an equilibrium on-the-job-search model with endogenous search intensity. Workers differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if the match production function is supermodular (submodular). The model is estimated on Danish matched employer-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We decompose wage variation into four sources: Worker heterogeneity, firm heterogeneity, frictions, and sorting. Worker heterogeneity contributes 51% of the variation, firm heterogeneity contributes 11%, labor market frictions 23%, and finally sorting contributes 15%. We measure the output loss due to mismatch by asking how much greater output would be if the estimated population of matches were perfectly positively assorted. In this case, output would increase by 7.7%.
contact : Raïcho Bojilov
 
 
Octobre 2014
 
Mardi 14 octobre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Edouard SCHAAL (NYU)

Titre : "Coordinating Business Cycles" 
 

We develop a dynamic stochastic general equilibrium model of business cycles with coordination failures. Because of an aggregate demand externality, firms only want to produce when other firms do as well. The presence of variable capacity utilization leads to multiple equilibria under perfect information. Under imperfect information, the equilibrium is unique and the economy endogenously fluctuates between a good equilibrium--high output, employment and investment--and a bad equilibrium with low output, employment and investment. Under some conditions, the economy exhibits coordination traps: after a series a bad shocks, the state of the economy is too depressed for firms to be able to coordinate on the high equilibrium and recessions may persist for an extended duration, consistent with features of secular stagnations. We use the model to analyze the impact of stabilization policies. Without additional frictions, fiscal interventions are detrimental to coordination. Optimal policy interventions take the form of production subsidies.
Contact : Jean-Baptiste Michau
 
*****

Mardi 7 octobre 

11:00 - 12:30 
Bibliothèque rez-de-chaussée - Département d'Economie

Pieter GAUTIER (Vrije Universiteit)

Titre : "Estimating equilibrium effects of job search assistance

Avec Paul Muller, Bas van der Klaauw, Michael Rosholm, Michael Svarer
 

Résumé : Randomized experiments provide policy relevant treatment effects if there are no spillovers between participants and nonparticipants. We show that this assumption is violated for a Danish activation program for unemployed workers. Using a difference-in-difference model we show that the nonparticipants in the experiment regions find jobs slower after the introduction of the activation program (relative to workers in other regions). We then estimate an equilibrium search model. This model shows that a large scale role out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis would conclude the opposite.
Contact : Jean-Baptiste Michau
 
 
Septembre 2014

 

Mardi 30 septembre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée Departement d'Economie

Dino GERARDI (Collegio Carlo Alberto)
Titre: "Bargaining over a Divisible Good in the Market for Lemons" (with Lucas Maestri)
 

Résumé : A seller dynamically sells a divisible good to a buyer. It is common knowledge that there are gains from trade and that the gains per unit are decreasing. Payoffs are interdependent as in Akerlof's market for lemons. The seller is informed about the good's quality. The buyer makes an offer in every period and learns about the good's quality only through the seller's behavior. We characterize the stationary equilibrium when the time between offers is small. The owner of a high-quality good sells it in dribs and drabs, whereas the owner of a low-quality good constantly randomizes between selling small pieces and accepting an offer for all the remaining units. We use this characterization to analyze the limiting equilibrium outcome as the good becomes more divisible. We prove that there is slow trading: a valuable good is smoothly sold over time. In contrast, the good is never partially sold when gains per unit are increasing.
Contact: Yukio Koriyama
 
*****

 

Mardi 23 Septembre
11:00 - 12:30 
Bibliothèque rez-de-chaussée Département d'Economie

Charles ANGELUCCI  (INSEAD/Columbia GBS)
Titre : "Motivating Agents to Acquire Information"
 

Résumé : It is difficult to motivate advisors to acquire information through standard performance contracts when for instance outcomes are uncertain and/or only observed in the distant future. Decision-makers may however exploit advisors' desire to influence the outcome. To investigate this, I build a model in which a decision-maker and an advisor both intrinsically care about the decision's consequences, which depend on an unknown state of the world. To reduce uncertainty, the advisor can provide information of low or high accuracy; this information becomes public but the decision-maker cannot assess its accuracy with certainty, and monetary transfers are moreover unavailable. I show that, when the decision-maker can pre-commit to a decision-rule, he should behave as if the information provided is more accurate than it actually is, and thus adopt excessively risky behavior. This result carries over in environments with private information and multiple advisors. Finally, I build upon this insight to also consider the case without commitment.
Contact : Raicho Bojilov
 
*****
 
Mardi 16 Septembre
11:00 - 12:30 
Bibliothèque rez-de-chaussée Département d'Economie

Rafael LALIVE (Université de Lausanne)
Titre : "How Does Raising Women’s Full Retirement Age Affect Labor Supply, Income, and Mortality? Evidence from Switzerland"
 

Résumé : Understanding why and when individuals retire is central to the current debate on pension reform. We study how women change their employment decisions in response to a Swiss pension reform that increased the full retirement age (FRA) twice, from 62 to 63 years, and from 63 years to 64 years, by date of birth. We find that raising the FRA strongly affects women’s labor supply. A one year increase in the FRA delays labor market exit by 7.9 months and claiming of retirement benefits by 6.6 months. We find no effect on labor supply and benefit claiming of affected women’s spouses. Mortality increases somewhat but the effect is not precisely estimated. Increasing the FRA has no statistically significant effect on the level of social security benefits but lowers social security wealth.
Contact : Raicho Bojilov
 
*****
 

Mardi 9 septembre 
11:00 - 12:30 
Bibliothèque rez-de-chaussée -  Département d'Economie

Philippe JEHIEL (PSE)
Titre: "On absolute auctions and secret reserve prices" (co-auteur :  Laurent Lamy)
 

Résumé : From a theory viewpoint, the use of auctions with zero public reserve prices also called absolute auctions, or the use of auctions with secret reserve prices is somehow puzzling despite being common. By allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret, we show in a competitive environment that these auction formats may endogenously emerge. We also analyze how buyers with various sophistications and sellers with various costs sort into the different formats, thereby offering a range of testable predictions. Alternative approaches are reviewed.

Contact: Yukio Koriyama 
 

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